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A report of UFO spottings in the desert near Tucson would certainly affect the demand for binoculars in the area around Tucson; it would NOT affect the supply of binoculars at all. Binoculars are made by Zeiss in Germany, and by other companies which would not necessarily have heard of the UFO spottings -- and even if they had, would have no reason to supply more unless the price of binoculars rose. Such a rise in the price of binoculars would lead to a movement along the supply curve, not a shift in the supply curve. The rise in the wages of farm workers increases the cost of production of oranges, hence the supply curve shifts up and to the left. Sketch the resulting shift before reading on. The equilibrium point moves up and to the left -- a higher equilibrium price and smaller equilibrium quantity will result in the market for oranges. More people means a higher demand for land -- the demand curve shifts up and to the right. Sketch the resulting shift before reading on. The equilibrium point moves up and to the right -- a higher equilibrium price and a larger equilibrium quantity will result. The resulting change in preferences will lead to a higher demand for fisth oil -- hence an increase in demand, and as a result an increase in equilibrium price and an increase in equilibrium quantity. The quantity supplied will of course increase as a result of the increase in price, but the supply does not change at all. You have to think carefully about the market interactions in this problem. An increase in the price of chicken feed results in a rise of the cost of production of chicken; hence a shift upward in the supply curve of chicken. The resulting equilibrium price of chicken will be higher; the equilbrium quantity of chicken will decrease. Faced with higher prices of chicken at the supermarket, more consumers will choose substitutes for chicken -- and the demand for beef will increase. The resulting equilbrium price of beef will be higher; the equilbrium quantity of beef will be lower. The demand for autos will decrease -- that is, the demand curve will shift back. Sketching the shift will demonstrate that the equilbrium price of autos will decrease and the equilibrium quantity of autos will also decrease . NOTE: Questions 11 through 15 involve the simultaneous shift of demand AND supply
curves. Mad cow disease will result in a decline in the supply of beef -- the supply curve for beef will shift to the left . As a result the price of beef will rise, and chicken will look more attractive than beef to consumers. The demand for chicken increases; the demand curve shifts right on the graph representing the chicken market. At the same time, the new breed of chicken costs less to feed; the reduction in cost shifts the supply curve down . The increase in demand would tend to pull the price of chicken up; the increase in supply would tend to pull the price of chicken down. Without more information, we cannot tell in which direction the price of chicken would move. However, we do know that both an increase in demand and an increase in supply would tend to increase the equilibrium quantity of chicken sold. The increase in population would tend to increase the demand for potatoes; the higher-yielding variety of potatoes would increase supply. Your graph illustrating the potato market should look very much like the previous problem; and the conclusion is the same: quantity definitely increases , but we are uncertain what happens to price. If apples are discovered to prevent colds, people will be willing to pay more for them; the demand curve (which shows reservation prices or willingness to pay) will shift up; there will be an increase in demand . If apple trees are attacked by a fungus, there will be a decrease in supply . If supply decreases and demand increases, the new equilbrium quantity is uncertain -- we do not know whether the increase in the quantity demanded at any given price offsets the decrease in the quantity supplied at any price. However, both an increase in demand and a decrease in supply would tend to raise the price -- hence the new equilibrium price rises Butter is a complement to corn; if the price of butter increases, the price of corn-with-butter increases. As a result of a higher price of butter, the demand for corn decreases . An increase in the price of fertilizer increases the cost of production of corn; the supply curve shifts up, and the supply of corn decreases. A decrease in demand tends to lower price; a decrease in supply tends to raise price, so the new equilibrium price of corn is uncertain . However, both the decrease in demand and decrease in supply tend to reduce quantity -- the new equilibrium quantity of corn certainly decreases . The demand for tofu has been increasing; the change from small-scale to factory-based production has increased the supply of tofu. The increase in the demand for tofu would tend to drive up price; the increase in supply would tend to drive down price. Hence the new equilibrium price of tofu is uncertain . However, both the increase in demand and the increase in supply tend to increase the quantity traded; the result will be that the new equilibrium quantity of tofu increases What is the effect on the equilibrium price and equilibrium quantity of orange juice?The supply of orange juice decreases and the supply curve of orange juice shifts leftward. The net effect of these events decreases the equilibrium quantity but has an undetermined effect on equilibrium price.
What is the effect on the equilibrium price and equilibrium quantity of?Upward shifts in the supply and demand curves affect the equilibrium price and quantity. If the supply curve shifts upward, meaning supply decreases but demand holds steady, the equilibrium price increases but the quantity falls.
What is the effect of an increase in the price of oranges on the demand curve for oranges?As per law of demand, when the price of a commodity rises the quantity demanded of the commodity decreases, i.e., implying an inverse relationship between demand and price. Thus, in case of oranges, a rise in price will lead to a fall in quantity demanded for oranges.
What is the effect on the equilibrium price and the equilibrium quantity in the coffee market?The correct answer is: B. It increases the equilibrium price of coffee and reduces the equilibrium quantity.
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What will be the effect of these changes on the equilibrium price and quantity in Orange market?
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